‘Pay how you drive’ insurance is one of the hottest trends in the industry and is often also referred to as telematics or ‘black box’ insurance. It offers motorists a more personalised policy.
Premiums of this nature are based on how, when and where a vehicle is being used and, according to the Association of British Insurers, are ‘more tailored to the users of a vehicle than is possible with a traditional motor insurance policy’.
This type of policy relies on GPS computer technology provided by the insurer, usually in the form of a small box fitted in a vehicle, which records key data about how a vehicle is being driven including, for example, cornering and braking patterns, speeds and road types driven on. Insurers then look at this data to assess the driver’s performance and, along with traditional factors such as age, occupation, vehicle type and claims history, use it to set the premium.
Telematics give motorists the means to prove they drive safety and they are rewarded for this by a lower policy rate in contrast to those who are deemed ‘less safe’. More traditional motor insurance is based on the ‘average’ driver style.
Drivers who usually benefit most from pay as you drive can insurance are those classed as high risk. These include young or new drivers as well as those who have a low annual mileage.
Not all insurers offer telematics but it is becoming increasingly popular as cost conscious motorists look for the best deals to keep costs down.